Morning Scan
Fed Looks at Higher Capital Requirements

Wall Street Journal

Shoppers are losing their patience with Black Friday sales, because it's so difficult to figure out what's the best deal on saving money, because of the layers of coupons, flash sales and other discounts. Retailers aren't the only ones at fault. Banks, too, have confused consumers whether a percentage-off deal is better than a dollar amount. Citigroup's Citi Retail Services, the private-label credit card issuer, has tested two offers this season. One gives consumers a fixed $20 off the first purchase made with a Citi-issued card. The other deal gave 30% off. Most consumers in the test used the first deal, even though 30% off usually provides more savings since most first purchases exceed $100, Citi Retail Services' managing director Leslie McNamara said.

Don't count out traditional banks in the emerging space of online marketplace lending, said Karen Mills, former head of the Small Business Administration. Mills spoke to the Journal about marketplace lenders and how traditional banks can catch up. Banks can start to use some of the data online marketplace lenders use to make credit decisions, Mills said. They can either adopt the use of big data themselves, or they can partner with the online lenders, or "do other kinds of arrangements that we haven't yet seen," she said.

Traditional banks have already made progress in reducing the time it takes to make a loan decision, she said. Another potential good sign is if hedge funds and other sources of capital for online marketplace lenders become less interested in the space. Online lenders' source of funds will dry up; meanwhile, banks still have their federally insured deposits.

Apple plans to introduce Apple Pay in China by February. Apple has cut deals with four state-run banks in China, unnamed sources said. How much Apple could charge customers to make payments is still a question. Apple gets 0.15% of all credit-card transactions in the U.S., and 0.5 cents on debit-card transactions.

Financial Times

Joining forces may be the only option Diebold and Wincor Nixdorf have, considering the declining fortunes of the ATM, the paper's Lex column said. Since cash transactions continue to decline, the ATM is going to be a shrinking part of Diebold Nixdorf's business. Diebold and Wincor Nixdorf need to pool their resources on software and services, in order to be able to successfully shift to that business strategy.

New York Times

The Fed is discussing potentially higher capital requirements in yearly stress tests, Gov. Daniel Tarullo said Monday. The stress test may be changed to affect the amount of capital a bank would need to have left after losses estimated by the assessment. Currently, banks pass the stress test if their capital does not fall below a certain level.

Tarullo suggested a new set of capital rules may be used; the bigger the bank, the more capital it must hold. For example, a large bank may need to keep extra capital, or a surcharge, of 3% of its assets, on top of the base-level 7%. Some, or all, of that surcharge may be added to the stress test minimum. Any of the proposals currently under discussion would be implemented for the 2017 stress tests. (See American Banker's coverage here.)

Elsewhere ...

Consumer Reports: The magazine has released its updated buying guide for banks and credit unions. Its ratings are behind the subscription wall. But in the teaser, Consumer Reports said the four largest banks—Bank of America, Citigroup, JPMorgan Chase and Wells Fargo—scored in the bottom fifth of its overall rankings.

Readers didn't say the big banks' services were bad. Rather, they found better deals with smaller banks. Consumer Reports looked at how to find the best basic checking and savings accounts; CDs; auto loans; credit cards; mortgages; prepaid cards; and more. The magazine also gave tips on how to switch to a new bank or credit union. "There are more banking options than ever so don't tolerate unpleasant or overpriced banking services," the magazine said.

Roanoke Times: Local retailers in the Roanoke, Va., area have set up their own online marketplace. The idea is to help small, local merchants compete with the likes of Amazon and other national online retailers.

14-Day Free Trial

The increasing adoption of virtual card payments by accounts payable departments has created an unex­pected complication for suppliers: more friction in the processing, posting and reconciliation of payments and receivables. The root of the problem is that most suppliers rely on a manual approach to processing e-mailed virtual card payments. Suppliers are forced to balance their organization’s need for operational efficiency and control with rising customer demand to pay with a virtual card. But a new breed of tech­nology enables suppliers to process virtual card payments straight-through, addressing the needs of buyers and suppliers. This paper details the growth of electronic business-to-business (B2B) payments, shows how manual approaches to processing virtual card payments cause friction in accounts receivables, describes a way to process virtual card payments straight-through, and highlights the benefits of friction­less payments.